Memoire Online - Marketing of agroforestry products in Sindh province of Pakistan

Dr. Heman D. Lohano (Economist) Supervisor Mrs. Tahmina Mangan (Economist) Co-supervisor

Chapter 1		Particulars List of Tables Acknowledgements Abstract Introduction	Page 1
	1.1	Objectives	3
2		Review of Literature	4
3		Materials and Methods	8
	3.1	Sampling procedure	8
	3.2	Data gathering Technique	9
	3.3	Marketing Margin	9
	3.4	Marketing Cost	10
	3.5	Net Margin	10
	3.6	Limitations of the study	11
4		Results	12
	4.1	Marketing System	12
	4.2	Marketing System of Agroforestry Products	12
	4.3	Marketing Structure Analysis	14
	4.4	Marketing Channels of Agroforestry Products	15
	4.5	Marketing Margin Analysis for Agroforestry wood products	19
	4.6	Agroforestry Marketing Issues in the Study Area
4		Discussion	24
5		Conclusion and Suggestions	27
		References	30
		Questionnaire	32

TABLE	PARTICULARS	PAGE
4.1	Marketing Channels of Agroforestry Wood Products at Private	16
	Farm Lands in Sindh
4.1	Wood Product Percentage from Agroforest Trees	19
4.2	Marketing Margins of Acacia nilotica (Babul) Products	20
4.3	Marketing Margins of Eucalyptus camaldulensis Products	22

First and the foremost, I offer my humble thanks to Almighty Allah Who enlightened me to achieve this academic goal. The data for this thesis were funded by ALP project on Agroforestry entitled as «Economic Analysis on Agroforestry Plantations in Sindh Province Pakistan». I would like to express sincere gratitude to my honourable supervisor and Principal Investigator of the project Dr. Heman D. Lohano, Associate Professor and Chairman, Department of Agricultural Economics, Faculty of Agricultural Social Sciences, Sindh Agriculture University Tando Jam for his invaluable support and supervision both during the preparation of the proposal and the write up of the thesis, including data analysis, interpretation of results, the proof reading and constructing professional scientific papers.

My sincere gratitude also goes to my co-supervisors, Mrs. Tehmina Mangan, Lecturer, Department of Agricultural Economics and Mr. Aijaz Ali Khooharo, Assistanat Professor, Department of Statistics, Faculty of Agricultural Social Sciences, Sindh Agriculture University Tando Jam for their support and serving on my supervisory committee.

I am thankful to my all friends who facilitated me in conducting field survey. Finally, I thank my parents for their never-ending love and moral support.

ABSTRACT OF THE THESIS OF

Pakistan is a forest poor country with very low cover of five percent of the total land as compared to the recommended level of 20-25 percent. Thus, agroforestry can help in achieving the national target of forest cover and in meeting the rising demand for wood and wood products. It is referred as plantation of trees on private agricultural land with main products; timber, mining-timber, fire-wood, pods, flowers, gum, forage etc., where as the major products are timber, mining-timber and firewood. Furthermore, it would not only generate additional income to farmers but it will also reclaim the soil conditions and is the main source of environmental benefits. In Pakistan, agroforestry contributes 46% of timber and 90% of firewood requirements whereas 14% of timber and 10% of firewood are being met from state forest only. Marketing structure and its efficiency determine how the consumer rupee is distributed among producer and different middlemen. The lower returns to the producers and high marketing margins to middlemen may result in inefficient agroforestry production system.

CHAPTER I

INTRODUCTION

The share of forest in gross domestic products (GDP) of Pakistan was only 0.6 percent in the year 2004-05. In this period, the forest area was 4.04 million hectares out of total land area of 79.61 million hectares. The forest cover in Pakistan, thus constitutes only 5.07 percent of its total land area, and is relatively low as compared to other Asian countries. For example in Bhutan, Sri Lanka, Japan and India, natural forest area is, 50.4, 42.2, 36.4 and 24.2 percent of the total land area in these countries. Pakistan is a forest-poor country with only 0.03 hectares of forest per capita as compared to the world average of 1.0 hectares (Government of Pakistan, 2005).

Due to rapid growth in population, demand for wood and other forest products is increasing. The state forest in this country is thus, insufficient to meet the timber and fire-wood requirements for growing population of the country. In the domestic production of forest products, these requirements are met through agroforestry, which refers to the plantation of forest trees on agriculture land. Collective name for land use systems and technologies where woody perennials (trees, shrubs, bamboos, etc.) are deliberately used on the same land management unit as agricultural crops and/or animals, either in some form of spatial arrangement or temporal sequence (ICRAF, 2006).

In Pakistan, the state forests contribute only 14% of timber and 10% of firewood whereas 46% of timber and 90% of firewood requirements are being met by agroforestry (Government of Pakistan, 2005). Acacia nilotica (Babur) is the most common forest tree species grown under agroforestry in Sindh. The other tree species include Eucalyptus camaldulensis, Neem, Talhi and Kandi etc. Acacia nilotica provides timber,

mining-props, and fire-wood. Its timber is commonly used for manufacture of low cost furniture, doors, windows, carts and other household articles. Its fire-wood is used by rural households and firms. Eucalyptus camaldulensis is mostly used as a low cost timber, chipboard manufacture and pulp making.

Marketing structure and its efficiency determines how the consumer rupee is distributed among producers and different middlemen. The high marketing margins to middlemen may result in inefficient production due to the lower returns to the producers and/or higher consumer expenditure on the products. For improving the production efficiency and lowering the consumer expenditure, there is need of detailed investigation of marketing structure and margins of agroforestry products.

Marketing structure and channels of agroforestry products are totally different from other agricultural products due to bulkiness and high weight of wood and other forest products. The previous studies in Pakistan have focused on marketing of vegetables, poultry and fruits. Khair et al. (2002) found that apple producers were merely getting 31% of consumer rupee, while the rest was going to different middlemen, thus showing an exploiting and inefficient marketing setup. Further they indicated that reasons for these high marketing margins include large number of market intermediaries, expensive packaging material, and high cost of transportation, illegal import of apples, and the lack of capital. In previous studies, no attempt had been made to study agroforestry marketing channels and margins earned by each intermediary. Therefore, this study conducted for detailed investigation of marketing of agroforestry products in Sindh.

The main goal of the study was to explore market structure and marketing margins of agroforestry products in four districts of Sindh, namely: Hyderabad, Matiari, Sanghar and Badin. The specific objectives of the study were:

Although this study was limited to four districts of Sindh, namely Hyderabad, Matiari, Sanghar and Badin but the results of this study would be helpful for the government to design policies that will increase well designed and perfect marketing system in Sindh as well as in Pakistan, and will encourage farmers to plant more forest trees on their land.

CHAPTER II
REVIEW OF LITERATURE

The available literature indicates that very limited research studies have been conducted in the field of agroforestry products and marketing analysis. Therefore, the present study will be one of the basic studies helpful for the policymakers and researchers with the subject area. However, the available literature reviewed here, are as under:

FAO (1993) found that marketing of fire-wood and charcoal in Peshawar was characterized by high cost when compared with other commercial energy sources like natural gas, liquefied petroleum gas (LPG) and kerosene. This study concluded that out of the estimated total number of 126,750 households in Peshawar, about 17,000 used firewood for household activities such as cooking, water heating and space heating. In addition the domestic sector, a large number of commercial establishments also used firewood. The annual consumption of fire-wood and charcoal were estimated at 44,600 and 3,500 metric tons, respectively.

Gangadharapp et al. (2004) investigated that 37 percent of the agroforestry growers cut the tree in the age group of 20-30 years followed by 25 percent between 30-40 years and only 17 percent of farmers harvested above 40 years old trees. Further they revealed that 62 percent of the farmers sold their products through forest contractors, 27 percent through saw-mill owners and 11 percent directly to consumers. Finally they explored that 58 percent of the farmers were not aware of the market price of their products.

Holding et al. (2006) discovered that tree cultivation for reasons like windbreaks, soil and water conservation had become a secondary objective of agroforestry growers, while the current primary objective of tree planting was for cash and investment.

Hollington et al. (2001) explored that wood industries can be established around growth of salt tolerant trees and establishment of agroforestry markets and processing facilities will allow saline lands to make a significant contribution to the economy.

Jayasankar et al. (2000) found that the inefficiencies in the functioning of wood marketing is due to exploitative trade practices arising out of the legal restrictions, and bureaucratic procedures are the main bottlenecks in the functioning of the bamboo markets in Kerala (India) which often tends to reduce the share of the farmers.

Kanowski (1997) suggested that simple plantation forests, with aim that in meeting the wood needs of societies to increase and satisfy sustainability criteria. This plantation forestry for commodity production benefits considerably from economies of scale and integration with industrial processing; it is also under strong cost and profit pressure, thus both demanding and permitting relatively high levels of resource inputs.

Kärnä et al. (2003) concluded that environmental issues had a significant impact on the forest industry. It is natural that companies seek to address environmental concerns of customers and other stakeholders. Further, results showed that majority of surveyed companies had at least partially integrated environmental issues into their marketing strategies and practices. They suggested forest certification as a necessary tool for marketing of forest products.

Keerio (1997) estimated that 67 percent of mining timber and 33 percent fire-wood had been produced from Acacia nilotica Hurry or block, he further investigated that Acacia nilotica fire-wood had been preferred in the market and fetched a higher price than other species.

Kella and Sangi (2000) investigated that agroforestry meets the nation's requirements of timber and fire-wood which is also principle source of revenue.

Khair et al. (2002) explored that apple producers were merely getting 31% of consumer rupee, the rest of it going to different middlemen, thus showing an exploiting and inefficient marketing setup. The results of this study further indicated that reasons for these high marketing margins were large number of market intermediaries, expensive packaging material and high cost of transportation, illegally imported apples and lack of capital.

Negussie et al. (2004) explored that income from eucalypt woodlots constituted about 28.5% of the total cash revenues generated from sales of tree/shrub products, where large farmers made only 2.5% and 0.2% of the total cash profit from eucalypt poles of respectively the two dominant intermediate brokers. They suggested that poor marketing infrastructure, weak institutional support, and biophysical limitations still undermine the financial benefits of eucalypt woodlots and other tree/shrub plantations. They also recommended that expansion of market-oriented eucalypt woodlots on marginal lands is expected to improve farmers' financial income and thus increases access to modern farm inputs.

Sharif (2004) investigated that case of citrus the duration of contract is almost one year, the producer share in consumer rupee was 35%, followed by contractor was 32%

and retailers was 20%. Similarly, the marketing margin analysis showed that major beneficiaries in the marketing were contractors and retailers. The underlying reasons for the major share of contractors and retailers were that the formers bring the product into the major markets of Pakistan while the latter takes the commodity in the easy reach to the consumer. Both bear the risk of post-harvest losses in case of contractors, major losses take place during transport, loading and unloading while in case of retailers the losses are in the form of deterioration of quality due to delayed sale, by pressing due to over-packing, and malpractices in crates filling.

CHAPTER III
MATERIALS AND METHODS

The chapter describes how the data was collected and analyzed for production, and marketing of agroforestry products in the study area. In view of objectives the following methods of study were adopted.

3.1 Sampling procedure

The aim of this study was to assess the existing production and marketing system of agroforestry in Sindh. However, in an empirical investigation it is impossible to collect information from the whole population. Therefore, researchers are often forced to make inferences based on information derived from a representative sample of the population. The size of the sample, and amount of variation, usually affect the quantity and quality of information obtained from the survey. The aim is to devise a sampling scheme, which is economical and easy to operate and provides unbiased estimates with small variance. The main characteristics of sampling theory applied in this study are discussed below.

The selection of a sample from the population is commonly used in economics, marketing and other disciplines because of limitations of covering the whole population. Barnett, (1991), considers that cost is the main constraint in carrying out interviews of the whole population. Given limitations in terms of money, time, efforts and data management, a sample is a more appropriate method. They argue that sampling not only saves cost and time but also gives more accurate results than a census. Given limitations of time, finance, data management, and traveling a decision was taken to interview 30 agroforestry farmers, 30 Wholesalers, 30 Saw-mill owner and 10 Retailers.

The sample size was considered adequate in terms of depth and accuracy required and in terms of the time and resources available for the research study; the respondents were selected through stratified random sampling technique in the study area. Stratified random sampling is one in which the population is divided in strata and from each stratum the population has an equal chance of being selected (Chaudhry, 2002).

3.2 Data gathering Technique

Primary data were collected during 2006 a comprehensive set of questionnaire was prepared (pre-tested before finalization) to record the interviews of the selected respondents, the questionnaire comprised the queries about marketing organization of agroforestry products, marketing cost incurred by various agencies, price of wood paid and received by various middlemen in the system and problems faced by various sellers and buyers. Secondary data were collected from various sources of government publications, from internet as well as from other literature, for finalization of the objects.

3.3 Marketing Margin

Marketing margin is the difference between sale prices (selling price and buying price) of two or more than two agencies for equivalent quantity of a specific commodity. The following formula was used to calculate the marketing margins,

where, Mm stands for marketing margin, Ps indicates sale price Pb represents buying price.

3.4 Marketing Cost

In Pakistan, producers of agricultural products believe that benefits of the value added due to marketing costs are mainly availed by the intermediaries, due to the time, place and form, must be equivalent to the corresponding differences in costs. Prices of particular commodity, at one time, therefore must be uniform over geographical areas plus or minus the cost of getting supplies from the area of surplus. Therefore, per unit marketing cost incurred by various agencies were estimated for agroforestry products to examine the pricing efficiency.

Marketing cost is referred as designate expenditure incurred by various marketing participants from the time as the commodity leave the farm-gate to reach marketing agents for processing. Marketing costs were incurred by the producers as well as all the intermediaries participating between producers and consumers in the flow of commodity. The principle components of marketing cost included loading, unloading, transportation, commission charges, processing, grading and marketing tax. These costs were computed on per 40 kg of wood. Each functionary was enquired about the amounts it spent on each 40 kg.

3.5 Net Margin

The net margin of a specific agency is the net earning, which it earns after paying

all marketing costs. Net earnings of various market agencies involved in the marketing of agroforestry products were computed with the following formula.

where, Nm stands for net margin, Ps indicates sale price, Pb represents buying price and Cm represents marketing costs incurred by the same agency.

3.6 Limitations of the study

The study was based on the primary data, collected through the field survey. Due to the shortage of time and financial constraints, the sample size was kept limited. During collection of data, many problems were faced. Due to the low literacy rate among the respondents, no written records regarding their costs and income etc were available. They hesitated to provide information about personal questions and incomes from trees/wood/wood-products they were doubtful about the purpose of the study despite of the fact that they were explained about the study, yet great care was taken to collect reliable information. All the information collected is based on the memories and estimates of the respondents.

CHAPTER IV

RESULTS

This chapter presents the survey findings, including marketing system, structure, channels and marketing cost and margins of agroforestry products from the study area.

4.1 Marketing System

Awareness of marketing as a concept or vital and dynamic element in economic development has greatly increased in the developing countries during the last three decades. The improvement in the functioning of commodity markets as well as the improved performance of the marketing system is now generally recognized as important, strategic elements in agricultural and economic development. Changes of attitude to marketing have come about particularly during the last decade, when many developing countries had to undergo stringent economic reforms. In most developing countries, government policies and programs directed at agricultural marketing have been based more on preconceived ideas about the nature of the existing marketing system than on accurate information and economic analysis.

4.2 Marketing System of Agroforestry Products

Thorough research into the markets available for each type the product is absolutely essential before committing to any forestry enterprise. For most forestry products, the buyer must be relatively close to the site. Otherwise, the transportation costs will eat up potential profits. Although short-rotation woody crops are a relatively new type of agroforestry without established markets, it is likely that regional markets will

develop over time where there are customers such as vegetable producers, fruit growers, and the fiber industry.

Regions where agroforestry is a longstanding tradition are likely to have markets for all types of forest products (non-wood and wood). Without such a forestry infrastructure already in place, it is risky to commit to an agroforestry system. However, because private lands are becoming a more important source of tree products, new markets will develop in those regions where agroforestry is established. It is, of course, difficult to predict where, especially when planning for harvests ten years or more in the future. Careful consideration must be given not only to the marketing plan, but also to the harvest plan as well.

Thinning and pruning of trees may generate sales of pods and forage (non-wood products) if wisely marketed. This part of the planning process requires the advice of a forest professional, whether a government agent or a private consultant. Remember that timber buyers are likely to have their own best interests in the mind, but landowners who want to add value to their forest products have some choices. One way is to certify that the forest and its harvest have been managed according to specified ecological standards.

In some cases, landowners can add value themselves, for example by cutting and selling fire-wood, access to a portable saw-mill can enable landowners to saw their own logs into lumber, air dry it, and sell it directly to specialty woodworkers.

Climatic, biological and socioeconomic factors are all available in Sindh to develop wood based industries through increasing agroforestry production. Yet wood business is not carried out on scientific lines and supply of wood and wood products does not adjust ever increasing demand for these products. Increasing growth rate in

population has resulted in lower per capita consumption of wood products which refers as timber, mining timber fire-wood, and other non-wood products.

4.3 Marketing Structure Analysis

Market structure lays on organization of a market, nature of competition and price behavior within market. Similarly, «market conduct» studies price policy of firms, aims to pursue and methods applied to charging price quantity to be produced and sale promotion cost incurred. Scherer and Ross (1990) added research and development commitment, investment in production facilities and legal tactics «market performance» mostly depends on behavior of sellers and buyers taking into account the parameters like price, output, production, selling cost etc. Market structure refers to the organizational characteristics of a market for the particular purposes, to those characteristics which determine the relationship of sellers and buyers in market to each other (Mohyu-ud-Din, 1998).

4.3.1 Marketing of Non-wood Forest Products

There are numerous agroforestry products depending on the tree species. The most common forest tree species planted in Sindh were Acacia nilotica (Babur) followed by other species including Euclaptus camaldulensis (Sufeda), Azadirachta indica (Neem), Talhi, Kandi, and other forest trees.

The non-wood forest products are pods, forage, boori, glue, Lac, Khnour and other indigenous products, generally marketing system for non-wood forest products was found fully non commercialized in the study area, it also seemed that these products were locally sold on cheep rate or gifted to some one. The producer didn't know value of their product because of imperfect marketing system.

4.3.2 Marketing of Agroforestry Wood Products

Wood and wood products are basic necessities of life weather people belong to rural as well as urban areas. Major portion of forest wood product is fire-wood, which is wastage or small pieces of wood, sold to bakers, restaurants and households while remaining products are Timber, is simply wood, that serves as raw material for various wood based industries like saw-mills and chip-board factories from which furniture is made that is used in household articles as well as for office appliances, and other wood product is Mining props, that is trunk of trees almost used as supporting pillars in coal mines, mainly Acacia nilotica props were traded to coal mines at Lakhra in Sindh and Quetta in Balochistan.

Marketing of agroforestry wood products is found inefficient due to the bulkiness or unawareness among producers or growers, because there were decentralized marketing channels prevailed in the study area, which refers as producers/ farmers do not bring their products in market, like other agricultural products, instead of that the product is sold directly to local assemblers, saw-mill owners and other intermediaries on the farm gate.

4.4 Marketing Channels of Agroforestry Products

Channels may be defined that flow of goods from producer, assembler or manufacturer to consumer. Marketing channels are identical in some cases but differ in other cases. When a commodity passes directly from the producers to the consumers, the route is known as direct channel, but when several agencies operate between producers and consumers, the route is referred as indirect channel of marketing. Marketing channels of agroforestry wood products are illustrated in Figure 4.1

Figure 4.1 Marketing Channels of Agroforestry Wood Products at Private Farm-Lands in Sindh

Figure 4.1 indicates that agroforestry wood products flow towards marketing agents, wood products are totally different from other agricultural products because shape of this product changes when it reaches to other marketing agent, movement of wood products and marketing agents are given bellow,

4.4.1 Producer

A large number of producers of agroforestry wood products geographically dispersed in various locations in the study area. Farmer deals with numerous agroforestry tree species, but mostly Acacia nilotica, and Eucalyptus camaldulensis, whole trees were sold by him. In Sindh Acacia nilotica trees were grown by two ways, Blocks and Shelterbelts and Scattered, Blocks of Acacia nilotica were designed for purpose of mining props and cut down at the age of 5-6 years and sold per acre bases, while shelterbelts and scattered trees of Acacia nilotica rotation is 10-15 years and whole trees are sold to Local Assembler. Eucalyptus camaldulensis trees cut at age of 8-10 years and whole trees were sold. Producers have no control on marketing of their products but they depend upon intermediaries.

4.4.2 Local Assembler

Local Assembler purchases whole trees from producers, after processing he deals with three distinct type products namely mining props, timber and fire-wood. Mining props supplied to contract agents of mining pits, timber supplied to the Saw-mill owners as well as to factories, and they supply fire-wood to retailers. The customs wood belonging to small private forest farms and individual villagers who might have brought fallen or cut trees from their own sources, thus act as agent to these timber owners.

4.4.3 Saw-mill owner

In order to determine the response of the saw-mill owners, the saw-mill owner bought timber logs from Local Assembler and engaged in some types of operations, after processing the timber logs, three product types were highlighted, Planks, Beams and fire-wood. Mostly planks were going into the manufacture of furniture of various kinds, doors and windows, wooden crates, household articles and other miscellaneous uses. Beams largely went to timber market traders for onward sale as bulk timber further shapeable and saw-able by the subsequent buyer and finally fire-wood which were wastage or small piece of the timber went to the retailer near cities.

4.4.4 Retailer

As above figure indicates that, retailers purchase fire-wood from Local Assembler and Saw-mill according to the demand of the consumer. They maintain direct contact with consumers (Restaurants, Bakers and Households) and make transactions according to the qualitative and quantitative aspects of the products. Large number of retailer working in all over the Sindh, majority of them were found at roadsides near cities. Retailers purchase that much quantity of fire-wood, which they could sell in a week, because they haven't facility to keep them for more than one week.

4.4.5 Consumer

Wood consumers are of different types, they use wood in many uses generally timber is used for doors, windows and other household articles, where as fire-wood is used for fire energy purpose, fire-wood consumers are restaurants, bakers and households.

Table 4.1 indicates that percentage of wood products produced from wood logs of Acacia nilotica and Eucalyptus camaldulensis. The Acacia nilotica block plantation yields 50 percent mining-timbre, 10 percent timber logs and 40 percent fire-wood, the Scattered & Shelterbelt of Acacia nilotica yield 16 percent of mining props, 38 percent timber and 46 percent of fire-wood, which shows that blocks were specially cultivated for mining props and yield higher percentage of mining props as compared to trees grown as shelterbelts and scattered. Where, Eucalyptus camaldulensis contained 12 percent mining props 43 percent timber, and 45 percent fire-wood.

4.5 Marketing Margin Analysis for Agroforestry wood products

Marketing margins are the differences between prices at two market levels. Margins represent the price charged by marketing agencies for all services provided including buying, transportation, storage and processing. In order to measure marketing margins, data on wood and wood-product prices were obtained at different stages in the marketing chain. Marketing margins depend upon the length of the marketing chain and the extent to which the product is marketed. It was investigated that marketing chain is not so longer; only three intermediaries were involved in the marketing of agroforestry products in the study area.

4.5.1 Marketing Costs

Marketing costs consists of the total costs incurred on marketing of product by each agency. One way of defining costs is all of the expenses incurred in organizing and carrying out the marketing process. Another definition is the charges, which are paid for any marketing activity such as, loading unloading, transportation, market taxes, storage and assembling. The most important factors which influence marketing costs are distance between production and consumption market.

4.5.2 Net Margin

The net margin of a specific agency is the net earning, which it gains after paying all marketing costs. The net profit margin of the agroforestry producers was calculated on a per 40 kg basis as the sale price of the wood, less production costs of wood producers. The net profit margins of collection Local Assembler/Saw-mill/Retailer were calculated as sale price of wood in the market minus purchase price and marketing costs.

Table 4.2 Marketing Margins of Acacia nilotica (Babul) Products (Rs per 40 K

Middlemen	Products purchased	Products sold	Price paid	Marketing Cost	Price received	Net Margin
Local Assembler	Logs from block plantation	Mining props, timber & firewood	50	17	83	15
Local Assembler	Logs from shelterbelt and scattered trees	Mining props, timber & firewood	63	17	88	07
Contract agent	Mining Pit props	Mining Pit props	83	15	103	5
Saw mill	Timber logs	Timber & firewood	103	16	130	11
Retailer	Firewood	Firewood	77	6	92	9

Table 4.2 presents that average price Rs 50 paid by Local assembler per 40 kg of wood logs of Acacia nilotica block owner and it was estimated that Rs 17 was spent as marketing costs, which included cutting, loading unloading and transportation, from the block plantation price received Rs 83 per 40 kg, which was weighted average price based on the percentage of wood products sold by the Local Assembler, his net margin was Rs 15 per 40 kg, apart from that he also purchased Scattered and Shelterbelts trees and paid price Rs 63, where he made marketing costs per 40 kg, including cutting, loading-unloading and transportation Rs 17, and he received price Rs 88 per 40 kg, which was weighted average price of the product sold and thus he took Rs 7 as net margin per 40 kg. Contract agent of mining props purchased props for Rs 83 per 40 kg and sold to coal mine for Rs 103 per 40 kg, where his expenditure at transportation only, was Rs 15 per 40 kg, thus his net margin was Rs 5 per 40 kg. Saw mill purchased timber logs for Rs 103 per 40 kg, after processing he sold processed timber (Essyoon, Pawa Takhta/ Phata etc) and fire-wood (wastage/small pieces) at weighted price of Rs 130 per 40 kg, his marketing cost, includes transportation only Rs 16 per 40 kg, where net margin took by saw mill owner was Rs 11 per 40 kg. From findings of field survey the retailer, that deals with fire-wood only, purchased fire-wood from Local Assembler as well as from Saw-mill at Rs 77 per 40 kg and sold to restaurants and households at Rs 92 per 40 kg, where his marketing cost was Rs 6 per 40 kg, thus his net margin was Rs 9 per 40 kg.

Note that the prices were calculated on average per 40 kg basis and only explicit costs of each intermediary were calculated, but labor working, monthly rent as well as investment costs were not calculated.

Table 4.3 Marketing Margins of Eucalyptus camaldulensis Products (Rs per 40 K

Middlemen	Products purchased	Products sold	Price paid	Marketing Cost	Price received	Net Margin
Local Assembler	Logs from shelterbelt and scattered trees	Mining props, timber & firewood	61	17	85	7
Contract agent	Mining Pit props	Mining Pit props	83	15	103	5
Saw mill	Timber logs	Timber & firewood	95	16	121	10
Retailer	Firewood	Firewood	77	6	92	9

The information on the margins of Eucalyptus camaldulensis products are presented in Table 4.3. The results show the average price of Rs 61 per 40 kg was paid by Local Assembler to the Eucalyptus camaldulensis producer, where he made marketing costs Rs 17 per 40 kg, that included cutting, loading- unloading and transportation, he received price Rs 85 per 40 kg, which was weighted average price of the product sold (mining props, timber and fire-wood), thus his net margin was Rs 7 per 40 kg. Mining props purchased by contract agent for Rs 83 per 40 kg and sold to coal mine for Rs 103 per 40 kg, where his expenditure on transportation only, was Rs 15 per 40 kg, thus his net margin calculated was Rs 5 per 40 kg. Saw mill purchased timber logs from Local Assembler for Rs 103 per 40 kg, after processing saw mill owner sold processed timber (Beams, Wooden crates, Takhta etc) and fire-wood (wastage/small pieces) at weighted price of Rs 121 per 40 kg, his marketing cost, including transportation and processing was Rs 16 per 40 kg, where net margin took by saw mill owner was Rs 10 per 40 kg. In case of wood retailer, he dealt with fire-wood only, from findings of field survey the retailer purchased fire-wood from Local Assembler as well as from Saw-mill at Rs 77 per

40 kg and sold to bakers, restaurants and households at Rs 92 per 40 kg, where his marketing cost was Rs 6 per 40 kg, thus his net margin was Rs 9 per 40 kg.

4.6 Agroforestry Marketing Issues in the Study Area

In the analysis of wood prices it was difficult to compare the prices in different seasons and wood products. There were some complications in formulating the standard price of wood, problem was day-to-day variation of prices of agroforestry product per 40 kg (mound) basis.

The workers engaged in the production, processing and marketing of agroforestry products were generally from the weaker sections of the society. They used simple skills acquired either from their elders or doing job without experiences.

The wood market was governed by a complex set of internal as well as external factors. Those included the availability of financing credit, skilled manpower and economic conditions of consumers, etc. The producers of agroforestry faced troubles due to the low rates of their products, Local Assemblers required cash to pay wages to the laborers for stacking of wood, pay rent for the wood depots, other overhead expenses, etc.

CHAPTER V

DISCUSSION

This chapter discusses the results of the study and compares them with previous studies. The main aim of this study was to examine existing production and marketing system of agroforestry products in Sindh. For this purpose primary data were collected on prices paid and purchased for wood and wood products and their costs. The data were analyzed in order to assess the marketing structure, margins and net margins. Data revealed that inefficient marketing channels were found for agroforestry non timber forest products, because of unawareness among producers. Results also revealed that agroforestry farmers were engaged in transaction of whole trees, which consist of wood logs, fire-wood and mining props for generation of their income. Results also estimated that percentage of wood products produced from wood lags of Acacia nilotica Block plantation were calculated 50 percent mining-timbre, 10 percent timber logs and 40 percent fire-wood, where, the scattered and shelterbelt trees of Acacia nilotica yield 16 percent of mining props, 38 percent timber and 46 percent of fire-wood. Eucalyptus contained 12 percent mining props, 43 percent timber and 45 percent fire-wood. Keerio (1997) also reported that wood material produced from Hurry or block of Acacia nilotica, of which about 67 percent is mining timber and the remainder 33 percent is fire-wood. Keerio reported higher percentage of mining-timber, because his study was based on entire Sindh province while, this study was limited to four districts.

Results exposed that average price Rs 50 paid by Local assembler per 40 kg of wood legs of Acacia nilotica block owner, which was estimated that Rs 17 spend as marketing costs, including cutting, loading unloading and transportation, price received

Rs 83 per 40 kg, which was weighted average price based on the percentage of wood products sold by the Local Assembler, net margin was Rs 15 per 40 kg, apart from that he also purchased Scattered and Shelterbelts trees and paid price Rs 63, where marketing costs per 40 kg, including cutting, loading- unloading and transportation Rs 17, he received price Rs 88 per 40 kg, which was calculated on weighted average price of the products sold and thus he took Rs 7 as net margin per 40 kg. Contract agent of mining props purchased props for Rs 83 per 40 kg and sold to coal mine for Rs 103 per 40 kg, where his expenditure at transportation only, was Rs 15 per 40 kg, thus his net margin was Rs 5 per 40 kg. Saw mill purchased timber logs for Rs 103 per 40 kg, after processing he sold processed timber and fire-wood at weighted average price of Rs 130 per 40 kg, where marketing cost was only Rs 16 per 40 kg, where net margin took by saw mill owner was Rs 11 per 40 kg. From findings of field survey the retailer, purchased fire-wood from Local Assembler as well as from Saw-mill at Rs 77 per 40 kg and sold to consumers at Rs 92 per 40 kg, where he made marketing cost Rs 6 per 40 kg, thus his net margin was Rs 9 per 40 kg. Siddiqui (1993) estimated that retailers purchased fuel-wood at Rs 36 per 40 kg and sold at Rs 64, where marketing costs per 40 kg were Rs 21, thus his net income was Rs 7 per 40 kg. Siddiqui estimated Rs 7 as net earnings for retailer on fire-wood in Peshawar area, where in this thesis net margin of Rs 9 estimated for retailer, which based in Sindh province, the disparity may be due to regional differences or nature of trade.

The results on margins of Eucalyptus camaldulensis wood products presented as the average price Rs 61 per 40 kg paid by Local Assembler whole trees, where he made marketing costs Rs 17 per 40 kg, which included cutting, loading- unloading and

transportation, where he received price Rs 85 per 40 kg, was weighted average price of the products sold, thus his net margin was Rs 7 per 40 kg. Mining props purchased by contract agent for Rs 83 per 40 kg and sold to coal mine for Rs 103 per 40 kg, where his expenditure on transportation only, was Rs 15 per 40 kg, thus his net margin calculated was Rs 5 per 40 kg. Saw mill purchased timber logs from Local Assembler for Rs 103 per 40 kg, after processing sawmill owner sold processed timber and fire-wood at weighted price of Rs 121 per 40 kg, his marketing cost, included transportation and processing was Rs 16 per 40 kg, where net margin took by saw mill owner Rs 10 per 40 kg. In case of retailer, he purchased fire-wood from Local Assembler and Saw-mill at Rs 77 per 40 kg and sold to bakers, restaurants and households at Rs 92 per 40 kg, where his marketing cost was Rs 6 per 40 kg, thus his net earnings was Rs 9 per 40 kg. Akbar (1997) resulted that fresh fuel-wood of Acacia nilotica, Dalbergia sisso, Eucalyptus camaldulensis and Tamarix aphylla in surrounding towns sold at the rate of Rs.35 per 40 kg, where dry wood sold at the rate of Rs. 65 to 70 per 40 kg. Akbar estimated that dry fir-wood sold in Punjab at Rs Rs. 65 to 70 per 40 kg, but for this thesis it was calculated that on average sale price of fire-wood was Rs 92 per 40 kg, the great disparity may be due to time and regional differences.

CHAPTER VI

CONCLUSION AND SUGGESTIONS

This chapter illustrates the conclusion of results and provides suggestions on the basis of conclusion. Agroforestry referred to as plantation of forest trees on private agricultural land. Marketing system for agroforestry wood and non-wood products was not identical, fully non commercialized marketing structure was found for non-wood forest products, these products were either sold on the farm get or gifted to others. The marketing channels of wood logs were found different from product to product; the products were mining props, timber and fire-wood. Farmers sold the whole trees or the block of trees to a contractor, who is also local assembler. The local assembler estimated the weight of the products from these trees and offered price to farmers. It was observed that in locations, there were one or two local assemblers only and market exploitation situations were prevailed, and they offered fewer prices. This situation may lead lower profits to farmers and may discourage forest tree plantation. Saw mills were engaged in distinct types of operations: they purchased timber logs, after processing were sold to wood-based industries, retailers and consumers and retailers of fire-wood finally sold fire-wood to local households, bakeries, and restaurants. Further it concluded that for Acacia nilotica tree species net earning of local assembler from blocks was Rs 15 and from shelterbelts and scattered trees Rs 7 per 40 kg, net earning of contract agent of mining props was Rs 5 per 40 kg, net margins of saw mill owner calculated as Rs 11 and net margin of retailer was Rs 9 per 40 kg. For Eucalyptus camaldulensis tree species net earning of local assembler was calculated Rs 7 per 40 kg, net margins of contract agent of mining props was Rs 5 per 40 kg, net margins of saw mill owner calculated as Rs 11 per

40 kg and net margin of retailer was Rs 9 per 40 kg of wood sold. This may be concluded that, in general the local assembler was earning higher margins because transaction of local assembler was found higher as compared to other intermediaries.

On the basis of conclusion drawn from primary data analysis and qualitative inferences, this may be suggested that climatic, biological and socioeconomic factors are all available in Sindh to develop wood based industries through increasing agroforestry production. Yet wood business is not carried out on scientific lines and supply of wood and wood products does not meet ever increasing demand for these products. Increasing growth rate in population have resulted in lower per capita consumption of wood products which refers as timber, mining timber, fire-wood, and other non-wood products. Poor marketing infrastructure, weak institutional support, and biophysical limitations still undermine the financial benefits of woodlots and other tree/shrub plantations.

The government should provide financing facilities to promote wood-based industries, approved timber markets should be established, profit should be ensured, and means of transportation of timber should be made adequate.

Tree plantation techniques should be introduced at school level, training and tree plantation services and plants should be available to tree growers, and expansion of market-oriented woodlots on marginal lands is expected to improve farmers' financial income and thus increases access to modern farm inputs.

The improvements in the functioning of commodity markets as well as the improved performance of the marketing system are now generally recognized as important strategic elements in agricultural and economic development.

There is lack of comprehensive information on the agroforestry products. Market orientation training should be provided to market operators by researchers. Specialized marketing system should be enhanced on the basis of market place and the nature of trade activities.

References:

Akbar, Ghulam. 1997. Production, Utilization and Distribution of Fuelwood in
the Deserts of Punjab, National Workshop proceeding on Wood fuel Production
and Marketing in Pakistan, Faisalabad, Pakistan, Pp: 94-102, 28-30 October 1997.

Azhar, B. A. 1996. Forest Resources, Pakistan Agricultural Economics, National Book Foundation, Islamabad, Pp: 311-330.

Chaudhry, Sher Muhammad. 2002. Introduction to Statistical Theory, Part-II, Ilmi Kitab Khana, Urdu Bazar Lahore, 2002.

FAO (Food and Agriculture Organization). 1993. Marketing of woodfuel in Peshawar city, a case Study, June 1993.

Gangadharapp, N. R., B. M. Shashidhar, J. Raguraj and S. Ganesamoorthi. 2004. Marketing Behavior and Information Source Consultancy Pattern of Farmers Practicing Farm Forestry: Case Study of Teak Producers in Karnataka State, India, 1^st World Congress of Agroforestry, Florida, USA, 27 June - 2 July 2004.

Government of Pakistan. 2005. Pakistan Economic Survey 2004-05, Finance Division, Economic Advisor's Wing, Islamabad, June 2005.

Holding, Christine, Sammy Carsan and Paul Njuguna. 2006. Smallholder Timber and Firewood Marketing in the Coffee and Cotton/Tobacco Zones of Eastern Mount, Kenya, Small-scale forestry conference proceedings, 18-23 June 2006.

Hollington, P. A., Z. Hussain, M.A. Kahlown and M. Abdullah. 2001. Saline Report on Pakistan, Pakistan Saline Agriculture Conference, 19-21 March 2001.

Jayasankar, B. and P. K. Muraleedharan. 2000. Efficiency of Agroforestry Product Markets in India, Indian Journal of Agricultural Economics, Vol: 55 Pp: 194-208, 2000.

Kanowski, Peter J. 1997. Afforestation and plantation forestry, Special Paper for XI World Forestry Congress, 13-22 October 1997.

Kärnä, J., Hansen E. and Juslin H. 2003. Environmental Activity and Forest Certification in Marketing of Forest Products, case study in Europe. Silva Fennica, Vol: 37(2) Pp: 253-267, 2003.

Keerio, G. R. 1997. Wood fuel in Sindh with reference to Hurries, National Workshop proceeding on Wood fuel Production and Marketing in Pakistan, Faisalabad, Pakistan, Pp: 47-50, 28-30 October 1997.

Kella, Lekhraj. and M. A. Sangi. 2000. Management Plan for Irrigated and Social Forestry Plantations of Sanghar District Vol:I, Progress Report submitted to Government of Sindh, June 2000.

Khair, Syed, M. Nisar A. Shah and A. Razzaq. 2002. Comparative Marketing Margins for Kaja (Red Delicious) and Shin Kulu (Golden Delicious) Apple in Pishin (Pakistan), Asian Journal of Plant Sciences, Vol: 1 Pp: 190-192, 2002.

Mohyu-ud-Din, Qamar. 1998. Agricultural Marketing, A-one publishers, Lahore, June 1998.

Negussie, Achalu, Holm Uibrig and Ruediger vonder Weth. 2004. Financial Viability of Eucalypt Woodlots and Revenue Distribution among Stakeholders: A Case from Guraghe Highlands, South-Central Ethiopia, 1^stWorld Congress of Agroforestry, Florida, USA, 27 June - 2 July 2004.

Scherer, F. M. and D. Ross. 1990. «Industrial Market Structure and Economic Performance», Boston: Houghton Mifflin Company.

Scott, j. Josiah. 2001. Marketing Specially Forest Products, The National Arbor Day Foundation Journal, University of Nebraska USA.

Shahid, M. I. 2000. Forestry in Pakistan, 4th Edition, Carvan Enterprises Lahore. 2000.

Sharif, Choudhry Muhammad. 2004. Opportunities and Constraints in the Production, Marketing and Export of Citrus in Punjab Ph.D. Thesis submitted to Faculty of Agricultural Economics and Rural Sociology University of Agriculture Faisalabad, Pakistan. June 2004.

Siddiqui, K. M. and Mohammad Amjad. 1993. Marketing of Woodfuel in Peshawar City, a Case Study, Pakistan, Food and Agriculture Organization of the United Nations, Bangkok, June 1993.

Smith, Bob. 2000. Marketing for Wood Products Companies, journal of Virginia Cooperative Extension Pp: 420-145, Virginia State University USA.2000.

Sohngen, Brent and Roger Sedjo. 1999. Potential Carbon Flux From Timber Harvests and Management in The Context of a Global Timber Market, Department of Agricultural, Environmental, and Development Economics, The Ohio State University, USA.

This questionnaire was designed especially for the study marketing of agroforestry products in Sindh.

Tree species	Acres if block	No. of trees if Scattered	Age of tree	Dry wood weight Per tree / acre	Total weight of dry wood

Tree species	Age of tree	Total weight	Timber logs weight	Mining props weight	Fire-wood weight	Other products weight

Laborer	No. of employees	Wage: per day/month/year	Total amount
Daily wages
Permanent monthly basis
Permanent yearly basis

Marketing of agroforestry products in Sindh province of Pakistan